Pagina's

Half an hour into Trichet's press conference, just as he announced that after the conference that there might be some changes in the markets, the yields on Italian bonds dropped below the 6% mark, but Portuguese bonds surged. Therefore, according to the market traders, the ECB started buying Portuguese bonds, in the third major intervention in capital markets in the past 24 hours.

In the mean time we have Barosso squealing for a urgent ratification of the proposed EFSF changes, but Germany is deliberately dragging its heals.

“It is not clear how reopening the debate just two weeks after the summit can lead to calming the markets,” said a senior official in Berlin. Other German officials suggested that Mr Barroso was coming to be regarded as a loose cannon in the eurozone debate.

Markets are tanking around the world. The Dutch AEX closed just a hair above the psychological 300 points mark. The Dow Jones, as of this writing is down down 500 points (4.4%) from last close. The euro is crashing against the Swiss franc. The markets at long last seem to realize the cupboard is bare, the chamber is empty.

Government debt to GDP is running high everywhere. When a country (such as the U.S.) runs near 100% gross debt to GDP and household debt combined with huge future deficits, it’s already dead on arrival.

Looking at the next dead-on-arrival candidates leads us to Germany and France. Although superficially it appears as if those countries are running a tight fiscal ship, in reality they are highly exposed to enormous losses via the Troika mechanism they have set up to bailout the weak sisters of Europe. These sisters continue to come for more manna from heaven (tranches), which in turn further weakens the so-called core countries.How many more tranches can France absorb? Finally, France, with a debt to GDP of 88%, is being warned on its bogus, inflated, top-notch credit rating. The mere revelation and recognition of the Troika losses taken by France in particular as well as Germany puts these countries into the tar pit.

In the mean time the newly appointed head of the IMF, Christine Lagarde, is under investigation for being complicit in the misuse of public funds in 2008, when she was France's finance minister.

Does all that sound like our 'leaders' still being in control? Strap in tightly and hold on to your hats. Tomorrow is going to be bumpy.